MAJOR NEW SURVEY REVEALS THE SCALE OF THE ILLEGAL TOBACCO MARKET IN THE UK

MAJOR NEW SURVEY REVEALS THE SCALE OF THE ILLEGAL TOBACCO MARKET IN THE UK

London, Tuesday, February 11, 2020 – The TMA, the trade association representing the UK tobacco industry has published a new survey of over 12,000 adult smokers across the UK, shining a light on their attitudes, awareness and understanding of illicit tobacco.

The survey results underline two key findings.

First, that the illegal tobacco market remains stubbornly resilient in the UK, in spite of the number of overall adult smokers being in decline year-on-year, and second, that consumer views towards buying and selling illicit tobacco are not ‘black and white’, with many people seeing the buying and selling illegal tobacco as a reasonable way of avoiding paying excessive tax on tobacco products. (Up to 90% of the price of a pack of cigarettes is tax.)

10 key survey findings include:

  • 76% of smokers bought tobacco in the last year that has not been subject to UK tax (not including purchases they have made themselves from abroad or Duty Free)
  • Nearly 1 in 2 smokers had no objection to buying non-UK duty paid tobacco from family, friends, colleagues, shops etc.
  • 15% of smokers claimed to ‘only smoke’ branded cigarettes (which have been illegal to buy in the UK since May 2017)
  • 44% of smokers who bought tobacco knowing that it was not subject to UK tax, spend over £10 each week
  • 9% of smokers who bought tobacco through social media or websites advertising cheap tobacco, do so at least once a month
  • 29% of smokers are aware of illicit tobacco being sold in their local area
  • Nearly three quarters of smokers who are aware of illicit cigarettes being sold in their local area have seen them traded for less than £5.00 for a 20 pack (the average retail price for a 20 pack is £10.80)
  • 82% of smokers who are aware of illicit tobacco being sold in their local area in the last 12 months have not reported it
  • 62% of smokers who knew that illicit tobacco was being sold in their local area did not report it because they felt it was ‘none of their business’
  • Nearly 1 in 2 smokers do not believe that there are sufficient deterrents in place to stop people from buying and selling illegal tobacco

The illegal tobacco market remains a major problem impacting on multiple audiences across the UK.

According to HMRC data up to £1.8 billion[1] was lost in government revenue in 2018-19 due to the trade and supply of illegal tobacco, with £45.2 billion lost since the start of the century[2]. This impacts on legitimate retailers and is especially punishing for smaller retailers with tobacco products accounting for 20% of their annual sales – their biggest sales category[3].

However, critically, the impact of the illegal tobacco trade is being felt throughout local communities as the same organised criminals who target vulnerable young people to courier drugs are increasingly supplying and trading in illegal tobacco, and it’s not difficult to see the incentive. Trading in illicit tobacco brings high financial rewards and compared to trading in many other illegal goods, less punitive penalties.

The Intellectual Property Office has referenced its concerns about the “emerging threat from organised crime”[4] citing “this lucrative [tobacco] criminal enterprise falls squarely within the remit of ‘illicit trade’, it is linked to other types of criminality, such as slavery and sexual exploitation. The loss of revenue from tobacco taxation is significant, with organised gangs trading at such levels to cost the UK millions a week in lost revenue”[5].

Rupert Lewis, Director of the TMA said: These survey findings highlight the volume and widespread availability of illicit tobacco throughout the UK and the ‘relaxed’ attitude that many consumers have towards buying and selling illicit tobacco, believing it to be a ‘victimless’ crime.

The reality is very different. The trade and supply of illicit tobacco is having a devastating impact on legitimate retailers who are unable to compete and are seeing their trade diverted away to ‘black market’ sellers. We are also seeing the wider consequences of organised criminals investing in the illegal tobacco market and the horrific affect that is having on local communities.

The TMA urges the Government to undertake a comprehensive review of the impact of tobacco policy in the up and coming Budget. The current policy of consistent punitive tax rises combined with the tobacco duty escalator is failing to deliver higher tax receipts and instead is driving many consumers towards buying illicit tobacco through illegal channels.

For a copy of the TMA Anti-Illicit Trade Survey, please contact info@the-tma.org.uk or on 07885706422

-ENDS-

Notes to editors:

  • The TMA (Tobacco Manufacturers’ Association) is the trade body for the UK tobacco industry. Our members are British American Tobacco Ltd, Gallaher Ltd (a member of the JTI Group of companies) and Imperial Tobacco Ltd.
  • The online survey was conducted by Mitchla Marketing Ltd in England, Wales, Scotland and Northern Ireland during summer 2019
  • Cigarette and hand rolling tobacco (HRT) accounted for £11.3 billion in government revenue in 2018-19, according to HMRC (in the most recent HMRC Tax Gap Estimates 2017-18, up to £1.8 billion of lost government revenue was caused by the consumption of illegal tobacco)
  • For further information, please contact the TMA on info@the-tma.org.uk or 07885706422

[1] Measuring the tax gaps 2019

[2] Calculation from Measuring the tax gaps (2001-19)

[3] Association of Convenience Stores, The Local Shop Report 2019

[4] IPO, IP Crime & Enforcement Report 2018-19

[5] Ibid.

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